Update : Nov. 21, 2011
Many stocks are affected by global events that may have either a positive or negative impact on the economic well-being of the entire market. Such events affect more than one stock. This type of price variability is called systematic risk. TOPIX futures provide a means of managing this risk with a view to reducing it.
By using TOPIX futures portfolio managers can adjust their portfolios without having a large impact on the underlying stock market.
TOPIX futures provide new investment tools, such as arbitrage and position trading.
Hedging and arbitrage trading can enhance the liquidity of underlying stocks, and help keep prices in 'proper alignment'.
Prices in both futures and underlying stock markets tend to settle at levels that best reflect current forecasts of supply and demand conditions. Thus, prices in the futures market help predict future prices of underlying stocks.